Americans have lost an average of $4,200 in annual income since Biden took office: study exposes how gains have been wiped out under Trump, while crippling inflation has pushed up prices.
- Consumer prices have risen 12.7 percent since 2021, far outpacing wages
- Heritage Foundation experts believe this has cost Americans around $3,000 each in purchasing power.
- As the Federal Reserve raises interest rates to a range of 3 to 3.25 percent, higher borrowing costs are putting pressure on Americans with mortgages, car loans and credit cards.
- The $4,200 loss erases the $4,000 increase in annual earnings that occurred under the Trump administration.
The average American has lost $4,200 in income due to skyrocketing inflation and rising interest rates, according to an analysis by the Heritage Foundation.
Experts from the right-wing think tank analyzed data on consumer prices and interest rates from the Federal Reserve. Consumer prices have risen 12.7 percent since 2021, far outpacing wages, and experts at Heritage believe this has cost Americans around $3,000 apiece in purchasing power.
As the Fed pushes interest rates into a range of 3 to 3.25 percent, higher borrowing costs are forcing Americans to take out mortgages, car loans and credit cards, which cost another $1,200 a year.
The $4,200 loss erases the $4,000 increase in annual earnings that occurred under the Trump administration, according to Heritage.
“Instead of correcting course more than a year ago when inflation began to rise, the Biden administration and Congress continued the profligate spending spree and the Federal Reserve let the printing presses run,” said EJ Antoni, who found the data, in a statement. ‘Many Americans have taken on more debt to meet the higher costs of living. Now the Fed is finally fighting inflation, which is raising interest rates and increasing funding costs. Rates on all types of consumer debt are rising.
The new figure represents an increase from the $3,400 lost income for the average American worker that Heritage found in July.
Wage growth in the US has reached its highest level in years, but the majority of American workers say their wage increases are not keeping up with the rise in the costs of everyday goods.
According to Bankrate, 55 percent said their income hasn’t kept pace with inflation, with the consumer price index sitting at 8.3 percent in August. Just under half of employed Americans say they’ve received pay raises in the last 12 months.
Only 2 out of 5 workers who received a raise or got it. a higher-paying job say their income has kept pace with or increased faster than their expenses.
August’s inflation rate of 8.3% represented a drop from a 40-year high of 9.1% in June and 8.5% in July, but showed that inflation remains high and well above the Federal Reserve target rate of 2%.
Grocery prices rose 13.5% from a year earlier, the biggest annual rise since 1979, the latest CPI data shows.
Grocery costs, rents and mortgage rates have hit Americans hardest lately.
Food prices rose 13.5 percent from last year, the biggest annual increase seen since February 1979. Housing costs also continued their upward march, with rent rising 6.7 percent in the last 12 months.
Gasoline prices, though down again from more than $5 in June, are still up 26 percent from last year.
This week, Federal Reserve Chairman Jerome Powell warned that it would be “very challenging” to control inflation without heavy job losses. The Fed issued another huge interest rate increase to raise rates by 75 basis points to their highest level since the 2008 financial crisis as it battles to get prices back down to its two percent target.
The US economy has been showing warning signs for some time, including six straight months of shrinking GDP in the first half of the year, meeting an informal definition of a recession, but Biden denies a recession has started.